Wage & Hour

California and federal wage and hour laws are complex, particularly in a hospital environment. Keeping current on meal and rest period rules, overtime obligations, and pay stub and payday obligations is a challenge for hospitals and health systems of any size.

CHA offers members an annual Labor and Employment Law seminar, which brings hospital human resources executives up-to-date information on wage and hour issues. In addition, CHA issues member memoranda on significant developments. CHA devotes resources at both state and federal levels to advocate on behalf of hospitals with regard to legislation, regulations and enforcement activity.

California and federal wage and hour laws are complex, particularly in a hospital environment. Keeping current on meal and rest period rules, overtime obligations, and pay stub and payday obligations is a challenge for hospitals and health systems of any size.

CHA offers members an annual Labor and Employment Law seminar, which brings hospital human resources executives up-to-date information on wage and hour issues. In addition, CHA issues member memoranda on significant developments. CHA devotes resources at both state and federal levels to advocate on behalf of hospitals with regard to legislation, regulations and enforcement activity.

Last month, the Los Angeles Superior Court ruled in favor of Long Beach Memorial Medical Center in a wage and hour class action lawsuit. In Castillo v. Long Beach Memorial Medical Center, the plaintiffs alleged that the hospital’s pay practices for nurses working 12-hour shifts was unlawful, relying in large part on the 2005 Huntington Memorial Hospital v. Superior Court decision. The trial court, however, rejected the plaintiffs’ arguments.

In Castillo, the plaintiff nurses were represented by a labor union. In their collective bargaining agreement, the hospital and union agreed that nurses who work 12-hour shifts would receive a lower hourly rate than nurses who work eight-hour shifts, but would receive overtime for the last four hours of their shift. In addition, when a 12-hour shift nurse worked eight hours or fewer due to low patient census, the hospital would pay the higher hourly rate associated with eight-hour shifts.

Earlier this month, the California Supreme Court issued its opinion in Mendoza v. Nordstrom clarifying California’s day of rest rules, which are set forth in Labor Code sections 551, 552 and 556. As previously reported in CHA News, the case was presented to the Supreme Court through a request by the Ninth Circuit. In short, the court interpreted the day of rest rules as follows:

One day of rest is guaranteed for each workweek. Periods of more than six consecutive days of work that stretch across more than one workweek are not, per se, prohibited.

The exemption for employees working shifts of six hours or less applies only to those who never exceed six hours of work on any day of the workweek. If on any one day an employee works more than six hours, a day of rest must be provided during that workweek, subject to other exceptions that might apply.

An employer causes its employee to go without a day of rest when it induces the employee to forgo rest to which he or she is entitled. An employer is not, however, forbidden from permitting or allowing an employee, fully apprised of the entitlement to rest, to independently choose not to take a day of rest.

This issue has significant implications for California hospitals, as many employees — such as those in pharmacy or laboratory departments who utilize a seven days on/seven days off schedule — work seven consecutive days. Further, with self-scheduling and extra shift compensation incentives, many employees voluntarily schedule themselves for seven consecutive days.

Earlier this week, the California Court of Appeal agreed to publish its recent decision in Gerard v. Orange Coast Memorial Medical Center, which reversed an earlier decision and determined that health care meal period waiver provisions are valid. The change in decision largely rested upon the passage of SB 327 (Chapter 506, Statutes of 2015), which conclusively confirmed that the special health care meal period waiver regulation was valid. CHA requested publication of the decision in official legal reports to ensure that other health care employers can rely on the decision as needed.

Last week, CHA submitted the attached letter requesting that the California Court of Appeal publish its recent decision in Gerard v. Orange Coast Memorial Medical Center, which reversed an earlier decision and determined that health care meal period waiver provisions are valid. The change in decision largely rested upon the passage of SB 327 (Chapter 506, Statutes of 2015), which conclusively confirmed that the special health care meal period waiver regulation was valid. CHA’s request that the decision be published in official legal reports would allow other health care employers to rely on it as needed.

CHA has filed an amicus letter in support of the employer’s request for re-hearing in a recent adverse rest period case. In Augustus v. ABM Security Services, the California Supreme Court issued a ruling that casts doubt on long-standing and consistent guidance from the California Division of Labor Standards Enforcement on meal and rest periods. In that case, the court determined that employees required to carry pagers or other electronic devices on their rest periods were not provided an off-duty rest period as required by law and, therefore, were owed the rest period premium payment under Labor Code Section 226.7. The breadth of the decision has adverse implications for meal period compliance as well.

As reported previously in CHA News, the U.S. Department of Labor (DOL) appealed the preliminary injunction blocking implementation of the overtime rule that was slated to take effect on Dec. 1. Last week, the Fifth Circuit granted the DOL’s motion to expedite briefing in the appeal. However, full briefing will not be complete until January 31, 2017, and an oral argument date has not been set — although the court stated it would schedule that for the first available sitting after the close of briefing. This timing would allow the DOL, under the Trump Administration, to discontinue the appeal if it chooses.

Hospitals should continue to closely monitor developments in this case and should ensure compliance with the California salary basis test, which will increase to $43,680 on Jan. 1, 2017.

On Nov. 22, the U.S. District Court of Texas issued an injunction blocking the Department of Labor (DOL) from enforcing its new overtime rule, scheduled to go into effect on Dec. 1. The new rule would have increased the salary test for exempt employees to $47,476. Today, DOL issued a statement on its website that it “strongly disagrees with the decision by the court” and is “currently considering all […] legal options.”

Regardless of whether a hospital has implemented the rule’s proposed changes, employers should carefully consider their next steps — which will depend on a hospital’s current stage of compliance. All employers must closely monitor the litigation, weighing the costs and benefits of available options. In any event, hospitals must also consider that the California salary-basis test will increase to $43,680 on Jan. 1, 2017.

As reported previously in CHA News, the Gerard v. Orange Coast Memorial Medical Center meal period waiver class action was pending before the California Supreme Court. The issue raised in the case is the validity of the special meal period waiver rules in Wage Order 5 that are applicable to health care employees, allowing them to waive one of their two meal periods on shifts exceeding 12 hours.

Although the case is fully briefed before the Supreme Court — including various amicus briefs filed by CHA ­— the Court last week transferred the case back to the Court of Appeal with directions to vacate its decision and to reconsider the case in light of SB 327 (Chapter 506, Statutes of 2015). It is unclear whether the Court of Appeal will request supplemental briefing.